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UAE expats and retirement: the uncomfortable truth

Opinion: A full and active retirement should be everyone's dream - but can the new visa laws actually bridge the gap between fantasy and reality, asks Jeremy Lawrence

There are many advantages to residents putting down roots and keeping their savings in the UAE. Having a greater age range in the country will also add new perspectives and talent.

By Jeremy Lawrence

Sat 22 Sep 2018 10:43 AM

There was good news for expat “lifers” in the UAE last week. From next year, residents aged 55 or over will be eligible for a five-year retirement visa providing they own property worth AED2m, have AED1m in savings or an income of AED20,000 per month.

There are many advantages to residents putting down roots and keeping their savings in the UAE. Having a greater age range in the country will also add new perspectives and talent.

But it should also make us think about how we provide for life after work.

Facing the truth

Let’s first acknowledge that we don’t save enough. HSBC’s Future of Retirement report 2017 found that only 44 percent of UAE respondents feel they will be “comfortable in retirement”, while 63 percent plan to work “to some extent” into retirement, which relies on available opportunities and continued good health.

Pension providers sell us a dream, encouraging us to plan for a fun-filled and adventurous second youth

We’ve spoken before about how expats must find a way to save more of their money for a longer period. While the UAE is now a lifestyle destination rather than a hardship posting, we must still put in the hard graft.

Another blind spot is how we envisage our retirement. Pension providers sell us a dream much like the picture above, encouraging us to plan for a fun-filled and adventurous second youth.

All we have to is trust these money men (and it’s mainly men) to invest wisely on our behalf, leaving us to plan for a never-ending gap year on the beaches of Thailand or bucolic seclusion in the depths of rural Europe.

While this sounds glorious, I often ask myself this question: let’s assume you are lucky to live into your 80s and beyond – then what?

Staying connected

For the past eight decades, Harvard University researchers have tracked the lives of the same group of men, and their conclusion is emphatic: happiness and health stem from strong relationships, while isolation speeds both mental and physical decline.

With this in mind, here are some points to consider that I almost never hear being discussed when retirement plans are shared – even by acquaintances who are much nearer to that date than I am.

What happens when your health declines and mobility is an issue, especially in places where there is little or no public transportation? What happens when part-time work ceases or there is a change in income? What are the nursing facilities like where you plan to retire – and can you afford them? And, painful as this is to mention, what happens when there is a loss of family and friends, particularly a spouse? Who will care for you in your final days?

Golden opportunity

Even with these new laws, the UAE doesn’t yet tick most of those boxes. But imagine a future scenario where new workplace savings schemes replace the current end-of-service benefit and allow residents to grow a bigger nest egg – as we discussed recently – and where health insurance evolves to serve residents deep into old age.

Real estate developers could then build retirement communities solely to cater to expats, complete with onsite nursing and social care. Instead of an outflow of residents, we might see retirees arrive from less stable, or just colder, countries and choose to make this their home.

Video of Why has the UAE introduced longer expat visas?

As explained in recent articles, the rewards to the UAE for not just keeping but attracting older residents could be huge: in the UK, for example, people aged 50 and above account for 50 percent of all consumer spending.

Right now, too much money is moved offshore or repatriated. With the developed world’s population ageing, it’s no exaggeration to suggest retirees could power an economic stimulus in any country that welcomes them.

Until that happens, though, we all have to think carefully about our where to spend our golden years, weighing up finances, family and familiarity. Let’s be realistic: putting the practicalities first will lead to the biggest pay off. In every sense.